Tesco’s proposed tie-up with wholesaler Booker is to be subjected to an in-depth probe by the Competition and Markets Authority (CMA).
The CMA, following its initial investigation, has some concerns over the proposed £3.7bn deal, including 350 areas where there is an overlap between Tesco shops and Booker-supplied independent stores.
The organisation believes the deal would negatively impact shoppers in those areas because of reduced competition.
The CMA said that if the deal were to go through, potentially Booker could offer inferior wholesale terms to the stores it currently supplies, “in order to drive customers to their local Tesco”.
Last month, Tesco urged the CMA to fast-track its investigation of the proposed tie-up, from a basic Phase 1 investigation to a more in-depth Phase 2 inquiry, which has now been confirmed.
The CMA said today that other competition concerns had been “raised and considered” during its initial Phase 1 investigation, but these were not thoroughly examined, given the move to Phase 2.
The statutory timetable for the in-depth Phase 2 investigation is 24 weeks, meaning the final report will be published before Christmas.
Tesco is axing 1,200 jobs at its head office, as well as 1,000 call-centre jobs, as boss Dave Lewis continues his turnaround of the grocery giant.
Meanwhile, Booker – UK’s largest food wholesaler which owns the Premier, Budgens and Londis store brands – generated a like-for-like sales rise of 4.2% in its first quarter.